4.5 Marketing Mix

Product

Good/service being sold

Branding

Distinguishing names and symbols to differentiate firms

Brand equity

Total amount of customers willing to pay extra for a branded product than a non-branded one

3 ways of calculating brand equity

• Financial performance

• Customer choice

• Positioning

Types of branding

• Family branding

• Product branding

• Company branding

• Own-label branding

Packaging

Enclosing or protecting products for sales

Pricing

This is the amount paid by consumers for sales

Formula for Cost-plus pricing

(SP-C ÷ SP) x 100

Penetration Pricing

Increasing prices of product overtime

Skimming Pricing

Decreasing prices overtime

Psychological Pricing

Perception of product being a little bit cheaper

Loss leader Pricing

Pricing lower than the product’s production cost

Promotional Pricing

Temporarily reducing process of products

Price discrimination Pricing

Charging different prices for the same product to different customers

Price Leadership Pricing

Dominant firms sets prices, and the others have no say

Predatory Pricing

Aim to simply damage the sales of rivals

Price War

Existing firms repeatedly cutting prices in an attempt to destroy the sales of their rivals

PED

Price Elasticity of Demand- used to analyse how the quantity demand is modified

PED Formula

(% change in the quantity demand of a good X ÷ % change in the prices of good X) x 100

PED > 1

Greater change in QD

0 < PED < 1

Smaller change in QD

PED = 1

Equally change in QD

Shrinkflation

When the same product is reduced in size, but its price stays the same

Skimpflation

Using alternative, relatively cheaper ingredients instead of the right amounts of its original ingredients

Place

How a product is distributed for customers to see

Wholesaler

Specialise in purchasing large quantities of stock

Retailers

Purchases from wholesalers, sell them to final consumer

Agent

A person who acts on behalf of the other groups

Promotion

Communication of messages to an audience

Above the line (ATL)

Communication through certain media

Below the line (BTL)

Direct marketing

Through the line

Combination of ATL and BTL activities

Guerilla Marketing

Interacting with the real world to cause big impact by surprising and interacting with customers